Fuel subsidies could reach Rp 100 trillion: Susilo
Wednesday, June 29 2005 - 02:10 AM WIB
"Regarding the fuel scarcity with the increase of prices that is so high, the fuel subsidy will grow and can reach more than 100 trillion rupiah, more than what is targeted," President Susilo Bambang Yudhoyono told reporters.
"This will burden the budget very much but the fuel scarcity cannot continue. Our imports became high with the current (world) prices," he said.
In a newly revised budget, Jakarta had nearly doubled its estimate of fuel subsidies this year to 76.5 trillion rupiah ($7.9 billion).
Yudhoyono also said the government might take new steps to increase domestic oil production.
"We are considering a new policy to increase domestic production by intensifying oil deposits that we can still explore," he said.
Indonesia's crude output fell to 936,000 bpd in May, its lowest in 34 years, versus its Organization of the Petroleum Exporting Countries (OPEC) quota of 1.425 million bpd.
Indonesia is considering withdrawing from the cartel after becoming a net importer of crude several months last year, although it managed to keep exports about 45,000 bpd above imports in the first quarter of this year.
Yudhoyono also said Indonesia should use fuel more efficiently and seek new energy sources to lower oil dependency.
Indonesia joins other Asian nations, from Thailand and the Philippines to Japan and China, in trying to curb energy usage, the only means they have to ease the pain of high fuel prices.
Unlike most OPEC members, who are growing richer with oil topping $60 a barrel, Indonesia suffers as the central government subsidises the price of retail fuels, more than a quarter of which are imported at international cost.
The reluctance of Indonesia and many other Asian nations to raise domestic prices by scrapping subsidies has allowed demand to grow unchecked by the impact of higher costs, adding fuel to a market already fired up about rising Asian consumption.
Indonesia raised prices by an average 29 percent in March, but gasoline is still a third of the cost in Singapore and diesel prices are less than half.(*)